For Americans to feel “financially comfortable,” 1 in 5 say they’d need $1 million, according to the CNBC Your Money Financial Confidence Survey, conducted in partnership with Momentive.
The description “financially comfortable” is subjective, and will mean different things to different people. Some might be thinking about current bills or debt they want to pay off, while others might be focused on long-term expenses or retirement goals.
Here’s the breakdown of the results, based on the amounts survey respondents selected:
$10,000: 8%
$25,000: 14%
$100,000: 36%
$500,000: 18%
$1 million: 20%
No answer: 4%
Nearly 75% of respondents say they need $100,000 or more to feel financially comfortable, with 20% selecting $1 million. That majority is steady across all income levels, although respondents earning six figures are more likely to say they need $100,000 or more.
As part of its National Financial Literacy Month efforts, CNBC will be featuring stories throughout the month dedicated to helping people manage, grow and protect their money so they can truly live ambitiously.
Increasingly, there are signs that Americans are struggling to keep up with additional costs.
And more people are saying it’s “somewhat” to “very difficult” for them to pay their usual bills in the last seven days, a 25% increase compared with a year earlier, according to the Census Bureau’s most recent Household Pulse survey.
Financial vulnerability is felt across income levels, too: A majority of Americans earning less than $100,000 say they live paycheck to paycheck, while 32% earning more than six figures say the same, according to CNBC and Momentive’s survey.
The survey of 4,336 respondents was weighted for age, race, sex, education and geography using the Census Bureau’s American Community Survey to reflect the demographic composition of the United States for those age 18 and over.
An Android statue is displayed in front of a building on the Google campus on January 31, 2022 in Mountain View, California. Google parent company Alphabet will report fourth quarter earnings on Tuesday after the closing bell.
Justin Sullivan | Getty Images
Google no longer requires people to be vaccinated against Covid in order to enter its buildings.
In a companywide email sent to employees Tuesday, which was viewed by CNBC, Google VP of global security Chris Rackow said “vaccines will no longer be required as a condition of entry to any of our buildings.”
“Last month marks three years since the World Health Organization declared a global pandemic,” Rackow wrote in his memo. “We put in place emergency measures such as our Covid-19 vaccine policy to keep everyone safe, but now the world is in a very different place. Most people today have some level of immunity against COVID-19, case rates and hospitalizations have stabilized for many months now, and governments all around the world — including the U.S. — are ending emergency declarations, lifting restrictions and ending vaccination mandates.”
In December 2021, Google told employees that they must comply with vaccine policies or they’d face losing pay and then eventually losing their job, citing rules for government contractors. Then, in February, ahead of asking employees to come back to offices and the U.S. appeals court deciding that rule’s legal standing, the company relaxed policies around requiring vaccines for employment, as well as other rules around testing, social distancing and masks.
However, it still required employees to be vaccinated to enter company sites.
Several hundred Google employees at the time signed and circulated a manifesto opposing the company’s Covid vaccine mandate, arguing leadership’s decision will have an outsized influence in corporate America. It also noted outbreaks kept happening at Google offices among vaccinated employees while those who declined to declare their vaccination status were still banned from offices and other gatherings including off-sites, summits and team events.
In his email, Rackow encouraged employees to remain up to date with their Covid vaccines going forward, “just as we encourage everyone to get a flu shot every year,” adding that the vaccines have been “critical” to keeping Google employees safe in the workplace.
The mandate change comes after President Joe Biden signed a bill Monday to end the national emergency declared during the Covid pandemic that has been in place for more than three years. In January, WHO Director-General Tedros Adhanom Ghebreyesus said Covid remains a global health emergency, though weekly Covid deaths have dropped 70% since the peak of the first massive omicron wave in February 2022. However, deaths started increasing again in December as China, the world’s most populous country, faced its largest wave of infection yet.
The mandate change also comes as Google has struggled to get employees back into physical offices and as the company has begun downsizing its real estate amid broader cost-cutting efforts. A CNBC report last month showed Google plans to ask cloud employees and partners to share desks at the division’s five largest locations, which include New York and San Francisco.
Google declined to comment.
Read the full memo below:
“Last month marks three years since the World Health Organization declared a global pandemic. We put in place emergency measures such as our Covid-19 vaccine policy to keep everyone safe, but now the world is in a very different place. Most people today have some level of immunity against Covid-19, case rates and hospitalizations have stabilized for many months now, and governments all around the world — including the U.S. — are ending emergency declarations, lifting restrictions and ending vaccination mandates.
Based on this, we’re now lifting our global vaccine policy. This means that vaccines will no longer be required as a condition of entry to any of our buildings. Those with existing accommodations will receive an email with further guidance.
Covid-19 vaccines have been a critical part of our overall strategy to keep Googlers safe, especially in the workplace. They also have the benefit of reducing the risk of severe disease if you get infected and have helped to protect vulnerable members of our community. We encourage everyone to remain up to date with their Covid-19 vaccines going forward, just as we encourage everyone to get a flu shot every year.
We’ll continue to follow all local regulations and will maintain our cleaning and ventilation standards in the office, and we ask that you do your part by monitoring your health and staying home if you feel sick.
We’ve come through an extraordinary time, which called on us to adapt and come together in ways we couldn’t have imagined. I am proud and grateful for the resilience you’ve all shown as we navigated so much uncertainty—for our company and the world—over the past few years.
Thank you again for everything you do to keep your colleagues and communities safe.
Normally a big increase in new U.S. jobs is cause for celebration. Not right now.
The Federal Reserve sees a tight labor market as a big obstacle in getting high inflation under control and wants hiring to slow as soon as possible, but it might not get its wish in March.
Google’s finance chief Ruth Porat recently said in a rare companywide email that the company is making cuts to employee services.
“These are big, multi-year efforts,” Porat said in a Friday email titled: “Our company-wide OKR on durable savings.” Elements of the email were previously reported by The Wall Street Journal.
In separate documents viewed by CNBC, Google said it’s cutting back on fitness classes, staplers, tape and the frequency of laptop replacements for employees.
One of the company’s important objectives for 2023 is to “deliver durable savings through improved velocity and efficiency.” Porat said in the email. “All PAs and Functions are working toward this,” she said, referring to product areas. OKR stands for objectives and key results.
The latest cost-cutting measures come as Alphabet-owned Google continues its most severe era of cost cuts in its almost two decades as a public company. The company said in January that it was eliminating 12,000 jobs, representing about 6% of its workforce, to reckon with slowing sales growth following record head count growth.
Cuts have shown up in other ways. The company declined to pay the remainder of laid-off employees’ maternity and medical leaves, CNBC previously reported.
In her recent email, Porat said the layoffs were “the hardest decisions we’ve had to make as a company.”
“This work is particularly vital because of our recent growth, the challenging economic environment, and our incredible investment opportunities to drive technology forward — particularly in AI,” Porat’s email said.
Porat referred to the year 2008 twice in her email.
“We’ve been here before,” the email stated. “Back in 2008, our expenses were growing faster than our revenue. We improved machine utilization, narrowed our real estate investments, tightened our belt on T&E budgets, cafes, micro kitchens and mobile phone usage, and removed the hybrid vehicle subsidiary.”
“Just as we did in 2008, we’ll be looking at data to identify other areas of spending that aren’t as effective as they should be, or that don’t scale at our size.”
In a statement to CNBC, a spokesperson said, “As we’ve publicly stated, we have a company goal to make durable savings through improved velocity and efficiency. As part of this, we’re making some practical changes to help us remain responsible stewards of our resources while continuing to offer industry-leading perks, benefits and amenities.”
Among the equipment changes, Google is pausing refreshes for laptops, desktop PCs and monitors. It’s also “changing how often equipment is replaced,” according to internal documents viewed by CNBC.
Google employees who are not in engineering roles but require a new laptop will receive a Chromebook by default. Chromebooks are laptops made by Google and use a Google-based operating system called Chrome OS.
It’s a shift from the range of offerings, such as Apple MacBooks, that were previously available to employees. “It also provides the best opportunity across all of our managed devices to prevent external compromise,” one document about the laptop changes said.
An employee can no longer expense mobile phones if one is available internally, the document also stated. And employees will need director “or above” approval if they need an accessory that costs more than $1,000 and isn’t available internally.
Under a section titled “Desktops and Workstations,” the company said CloudTop, the company’s internal virtual workstation, will be “the default desktop” for Googlers.
In February, CNBC reported the company asked its cloud employees and partners to share desks by alternating days and are expected to transition to relying on CloudTop for their workstations.
Google employees have also noticed some more extreme cutbacks to office supplies in recent weeks. Staplers and tape are no longer being provided to print stations companywide as “part of a cost effectiveness initiative,” according to a separate, internal facilities directive viewed by CNBC.
“We have been asked to pull all tape/dispensers throughout the building,” a San Francisco facility directive stated. “If you need a stapler or tape, the receptionist desk has them to borrow.”
A Google spokesperson said the internal message about staplers and tape was misinformed. “Staplers and tape continue to be provided to print stations. Any internal messages that claim otherwise are misinformed.”
Google’s also cutting some availability of employee services.
“We set a high bar for industry-leading perks, benefits and office amenities, and we will continue that into the future,” Porat’s email stated. “However, some programs need to evolve for how Google works today.”
“These are mostly minor adjustments,” stated a separate internal document from the company’s real estate and workplace team. The document said food, fitness, massage and transportation programs were designed for when Googlers were coming in five days a week.
“Now that most of us are in 3 days a week, we’ve noticed our supply/demand ratios are a bit out of sync: We’ve baked too many muffins on a Monday, seen GBuses run with just one passenger, and offered yoga classes on a Friday afternoon when folks are more likely to be working from home,” the document stated.
As a result, Google may close cafes on Mondays and Fridays and shut down some facilities that are “underutilized” due to hybrid schedules, the document states.
As a part of the January U.S. layoffs, the company let go of more than two dozen on-site massage therapists.
Read the full email from Ruth Porat here:
This year, one of our important company OKRs is to deliver durable savings through improved velocity and efficiency. All PAs and Functions are working towards this: Googlers have asked for more detail so we’re sharing more information below. This work is particularly vital because of our recent growth, the challenging economic environment, and our incredible investment opportunities to drive technology forward—particularly in AI.
We’ve been here before. Back in 2008, our expenses were growing faster than our revenue. We improved machine utilization, narrowed our real estate investments, tightened our belt on T&E budgets, cafes, Microkitchens and mobile phone usage, and removed the hybrid vehicle subsidy. Since then, we’ve continued to rebalance based on data about how programs and services are being used.
How we’re approaching this
The hardest decisions we’ve had to make as a company to reduce our workforce, and that is still being worked through in some countries. Most of the other large changes and savings won’t be visible to most Googlers but will make aa noticeable difference to our costs — think innovation in machine utilization for AI computing and reduced fragmentation of our tech stack. These are big-multi-year efforts. A few examples:
We are focused on distributing our compute workloads even more efficiently, getting more out of our servers and data centers. We’ve already made progress with these efforts and will continue to drive efficiencies – this work adds up given infrastructure is one of our largest areas of investment.
As we apply our efficient and well-tuned infrastructure and software to ML, we’re continuing to discover more scalable and efficient ways to train and serve models.
Improving external procurement is another area where data suggests significant savings – on everything from software to equipment to professional services. As one part of this, we’re piloting an improved buying hub that helps teams find suppliers that we’ve negotiated great rates with.
There are other areas we’ve spoken about that will make a big difference: we’re continuing to redeploy teams to higher priority work, to maintain a slower pace of hiring, to be responsible about our T&E spending, and to implement numerous suggestions from the Simplicity Sprint improve our execution and increase our velocity – particularly on prioritization, training, launch and business processes, internal tools and meeting spaces.
Changes to programs and services
We want to be upfront that there are also areas where we’ll realize savings that will impact some service Googlers use at work and beyond.
We set a high bar for industry-leading perks, benefits and office amenities, and will continue that into the future. However, some programs need to evolve for how Google works today. As well as helping to bring down costs, these changes will reduce food waste and be better for the environment.
We’re adjusting our office services to the new hybrid workweek. Cafes, Microkitchens and other facilities will be tailored to better match how and when they are being used. Decisions will be based on data. For example, where a cafe is seeing a significantly lower volume of use on certain days, we’ll close it on those days and put more focus instead on popular options that are close by. Similarly, we’ll consolidate microkitchens in buildings where we’re seeing more waste than value. We’ll also shift some fitness classes and shuttle schedules based on how they’re being used.
We’ve also assessed the equipment we provide Googlers. Today’s devices have a much longer lifespan and greater performance and reliability, so we have made changes to what’s available and how often it’s replaced—while making sure that people have what they need to perform their role. Because equipment is a significant expense for a company of our size, we’ll be able to save meaningfully here.
Just as we did in 2008, we’ll be looking at data to identify other areas of spending that aren’t asa they should be, or the don’t scale at our size. We will let Googlers know of any other changes that directly impact services they use.Our opportunities as a company are enormous. We have clear OKRs and substantial resources at our disposal to pursue them, but these resources are finite. Focusing on using them effectively makes a huge difference.
Technology shares are modestly higher in late trading Tuesday after the memory chip company posted financial results for its fiscal second quarter ended March 2 that were about in line with expectations, as a weak market for PCs and smartphones continued to weigh on the company’s results. Micron also said that as part of its cost-reduction program, it will reduce staff by about 15%—up from a previous plan to cut heads by 10%.
But there are some promising signs for the memory chip maker.
Walt Disney Co. will begin the process of eliminating 7,000 jobs this week, company Chief Executive Bob Iger said in a memo to staff Monday.
“This week, we begin notifying employees whose positions are impacted by the company’s workforce reductions,” Iger wrote in the memo, obtained by MarketWatch. “Leaders will be communicating the news directly to the first group of impacted employees over the next four days. A second, larger round of notifications will happen in April with several thousand more staff reductions, and we expect to commence the final round of notifications before the beginning of the summer to reach our 7,000-job target.”
Disney’s DIS, +1.64%
three-phase layoff is “part of a strategic realignment of the company, including important cost-saving measures necessary for creating a more-effective, coordinated, and streamlined approach to our business,” said Iger, who returned last year as CEO following the ouster of Bob Chapek.
Disney’s stock was up 1.4% in early-afternoon trading Monday. So far this year, shares have advanced 10% compared with the S&P 500 index’s SPX, +0.16%
gain of 3.8% over the same period.
The numbers: The U.S. economy accelerated in March, S&P Global surveys showed, but so did inflation as companies raised selling prices.
The S&P Global Flash U.S. services-sector index rose to an 11-month high of 53.8 from 50.5 in the prior month. Most Americans are employed on the service side of the economy.
The S&P Global U.S. manufacturing sector index, meanwhile, increased to 49.3 from 47.3. That’s a five-month high.
Any number above 50 points to expansion. Figures below that signal contraction.
The S&P Global surveys are among the first indicators each month to assess the health of the economy.
Key details: New orders, a sign of future sales, rose for the first time since last September at service-oriented companies.
Booking at manufacturers fell again, but at the slowest pace in six months. More positively, production increased for the first time since last September.
Employment rose across the economy as both service companies and manufacturers said they added new workers.
On the downside, the increase in demand allowed companies to raise prices at the fastest pace in five months.
Business leaders said rising costs, especially labor, contributed to their decision to raise prices.
That’s not good news for Federal Reserve officials who worry that rising wages could make it harder to get high inflation under control.
Big picture: The service and industrial sides of the economies are following different trajectories.
Americans are spending relatively more money on services such as travel and eating out and spending less on goods. As a result, service companies are still hiring and growing at a faster clip.
Manufacturers are basically treading water due to the shift in consumer spending patterns as well as the depressive effects of higher inflation and interest rates.
Adding it all up, though, the S&P reports paint the picture of a expanding economy that is not on the doorstep of recession.
What remains to be seen is how much the recent stress in the banking sector hurts lending and makes it harder for businesses to borrow and invest.
Looking ahead: “March has so far witnessed an encouraging resurgence of economic growth,” said Chris Williamson, chief business economist at S&P Global.
“There is also some concern regarding inflation,” he said. “The inflationary upturn is now being led by stronger service sector price increases, linked largely to faster wage growth.”
Market reaction: The Dow Jones Industrial Average DJIA, -0.17%
and S&P 500 SPX, -0.13%
fell in Friday trades.
The numbers: The number of Americans who applied for unemployment benefits last week slipped to a three-week low of 191,000, signaling little erosion in a strong U.S. labor market even as the economy faced fresh strains.
The number of people applying for jobless benefits is one of the best barometers of whether the economy is getting better or worse. New unemployment applications remain near historically low levels.
Economists polled by The Wall Street Journal had forecast new claims to total 198,000 in the seven days ended March 18. The numbers are seasonally adjusted.
Key details: Twenty-eight of the 53 U.S. states and territories that report jobless claims showed a decrease last week. Twenty-five posted an increase.
Most of the changes were small except in Indiana.
One potential red flag: The number of raw or actual claims — before seasonal adjustments — was much higher last week compared to the same week a year earlier. But so far there’s little sign of a trend.
“Even the tens of thousands of recent [high-tech] layoffs have almost completely been absorbed by a powerful labor market that has plenty of expansion left in it,” contended Robert Frick, chief corporate economist at Navy Federal Credit Union.
The number of people collecting unemployment benefits across the country, meanwhile, rose by 14,000 to 1.69 million in the week ended March 11. That number is reported with a one-week lag.
These continuing claims are still low, but a gradual increase since last year suggests it’s taking longer for people who lose their jobs to find new ones.
Big picture: Jobless benefit claims are one of the first indicators to emit danger signals when the U.S. is headed toward recession. It’s still not flashing a red-light, or even a yellow one, as the economy comes under more duress.
Both of these actions could constrain the economy in the months ahead, curb hiring and potentially boost a low unemployment rate. If so, watch the trend in new jobless claims.
Looking ahead: “Most companies are either still hiring or are holding onto their employees and seeking other ways to cut costs,” said chief economist Joshua Shapiro of MFR Inc.
“This is consistent with our view that layoffs will rise less dramatically than normally might occur as companies do all they can to avoid shedding workers who have been incredibly difficult to recruit and retain.”
Market reaction: The Dow Jones Industrial Average DJIA, +0.23%
and S&P 500 SPX, +0.30%
were set to open higher in Thursday trades. Stocks have been under pressure since the failure of SVB earlier this month.
Amazon.com Inc. is eliminating another 9,000 jobs, the company announced Monday morning.
In a memo to staff, Amazon AMZN, -1.25%
Chief Executive Andy Jassy said the cuts would take place over the next few weeks and primarily affect Amazon Web Services, People Experience and Technology Solutions, advertising and Twitch. [Twitch CEO Dan Clancy broke the news of 400 layoffs to employees in a blog post later Monday.]
“This was a difficult decision, but one that we think is best for the company long term,” Jassy wrote.
“For several years leading up to this one, most of our businesses added a significant amount of headcount,” Jassy added. “This made sense given what was happening in our businesses and the economy as a whole. However, given the uncertain economy in which we reside, and the uncertainty that exists in the near future, we have chosen to be more streamlined in our costs and headcount.”
The news sent the retailer’s stock down 1% in trading Monday.
The latest layoffs, amid a challenging macroeconomic climate that has claimed tens of thousands of jobs in the tech industry, follow an earlier round at Amazon, announced in November, that affected more than 18,000 employees. Additionally, Amazon has paused construction of its second headquarters in Virginia.
At the same time, there are rumblings out of the Beltway that the Biden administration is preparing legal actions against Amazon stemming from investigations into its business practices, according to a report in Politico.
Amazon is the second Big Tech company this month to announce additional job cuts. Last week, Mark Zuckerberg, CEO of Facebook parent Meta Platforms Inc. META, +1.12%,
wrote in a blog post the social-networking company would slash 10,000 more employees as it focuses on a “year of efficiency.” The move drove Meta shares up 7% and helped the company top $500 billion in market value for the first time since June.
In November, the company said it would cut 11,000 employees, or about 13% of its workforce, in the first layoffs in the company’s 18-year history.
The numbers: The U.S. created a robust 311,000 new jobs in February, raising the odds of another sharp hike in interest rates by the Federal Reserve later this month.
Economists polled by The Wall Street Journal had forecast 225,000 new jobs.
The increase in employment last month followed a revised 504,000 gain (initially 517,000) in January, the government said Friday.
The large back-to-back increases could force the Fed to raise interest rates higher than it had planned to slow the economy and loosen up the tightest labor market in decades. The central bank meets March 21-22 to plot its next move.
A sign advertises job openings outside a business in Illinois. Lots of companies are still hiring, but the economy has slowed and job creation is likely to as well.
Scott Olson/Getty Images
Yet there were a few glimmers of hope for the Fed.
The unemployment rate rose a few ticks to 3.6%. Hourly wages rose just 0.2% to mark the smallest increase in a year. And the share of able-bodied people in the labor force climbed to a three-year high.
All of these are pressure valves on the labor market and the broader economy from high inflation.
Investors appeared to put more weight on those factors than another big increase in employment. Stocks rose and bond yields fell.
Big picture: An expanding U.S. economy has shown lots of resilience in the face of rising interest rates, but analysts doubt the good times can last. Higher borrowing costs typically slow the economy by depressing consumer spending and business investment.
Just look at the housing market, where soaring mortgage rates have crushed sales and new construction. The same could happen to the rest of the economy if the Fed has to jack up rates more than Wall Street expects.
Already, a robust U.S. labor market is showing signs of fraying. Job postings have declined, lots of large companies have announced layoffs and workers who lose a job are taking longer to find a new one.
It just might not be enough for the Fed.
Market reaction: The Dow Jones Industrial Average DJIA, -1.66%
and S&P 500 SPX, -1.85%
trimmed premarket losses in Friday trades. The yield on the 10-year Treasury fell to 3.78%.
Investors hope some signs of cooling in the labor market will encourage the Fed to keep raising interest rates in smaller increments.
General Motors Co. on Thursday announced employee buyouts that are expected to lead to charges of $1.5 billion as the auto maker seeks to be “nimble in an increasingly competitive market.”
GM’s GM, -3.16%
stock slipped 2% after the news. The announcement comes a little over a week after the Detroit News reported that GM was cutting about 500 jobs, which came roughly a month after the company said it wasn’t planning layoffs.
“By permanently bringing down structured costs, we can improve vehicle profitability and remain nimble in an increasingly competitive market,” a GM spokesperson said.
The buyouts, which the company is calling a voluntary separation program, are being offered to U.S. salaried employees with at least five years of service and to global executives with at least two years of service, GM said.
The program offers employees “an opportunity to make a career change or retire earlier,” the company said. “Employees are strongly encouraged to consider the program.”
GM said in late January that it planned to implement a program aimed at cutting costs by $2 billion per year by 2024.
The buyouts are part of that effort, which also includes reducing vehicle complexity and cutting discretionary spending, GM said.
U.S. employees taking the buyout would receive 1 month of pay for every year of service, up to 12 months, as well as COBRA benefits, a prorated performance bonus and help finding a new job.
GM said it expects to record the bulk of the separation charges in the first half of 2023.
GM in January reported fourth-quarter earnings that beat Wall Street expectations and issued guidance that was also well above forecast.
The company said it had led the U.S. auto industry in sales and had the largest year-over-year increase in market share among auto makers, thanks to “strong demand for our products and improved supply chain conditions.”
GM’s stock has run up 18.2% year to date through Wednesday, while the S&P 500 SPX, -0.22%
has gained 4%.
Silicon Valley could use a reboot. The biggest players aren’t growing, and more than a few are seeing sharp revenue declines. Regulators seem opposed to every proposed merger, while legislators push for new rules to crack down on the internet giants. The Justice Department just can’t stop filing antitrust suits against Google. The initial public offering market is closed. Venture-capital investments are plunging, along with valuations of prepublic companies. Maybe they should try turning the whole thing on and off.
The only strategy that seems to be working is to lay people off. Tech CEOs suddenly are channeling Marie Kondo, tidying up and keeping only the people and projects that “spark joy,” or at least support decent operating margins. Layoffs.fyi reports that tech companies have laid off more than 122,000 people already this year.
These days, tuition accounts for about half of public college revenue, while state and local governments provide the other half. But a few decades ago, the split was much different, with tuition providing just about a quarter of revenue and state and local governments picking up the rest.
Over the 30 years between 1991-92 and 2021-22, average tuition prices more than doubled, increasing to $10,740 from $4,160 at public four-year colleges, and to $38,070 from $19,360 at private institutions, after adjusting for inflation, according to the College Board.
Wages haven’t kept up.
“Household income has been stagnant,” higher education expert Mark Kantrowitz told CNBC previously.
Because so few families could shoulder the rising cost of college, they increasingly turned to federal and private aid to help foot the bills.
The shift to “high-tuition, high-aid” caused a “massive total volume of debt,” according to Emily Cook, an assistant professor of economics at Tulane University.
“The federal government should get out of the student loan business,” Diana Furchtgott-Roth, an economics professor at George Washington University and former chief economist at the U.S. Department of Labor, told CNBC.
With nearly no limit on the amount students can borrow to help cover the rising cost of college, “there is an incentive to drive up tuition,” she said.
Now, “schools can charge as much as they want,” Furchtgott-Roth added.
Once families hit their federal student loan limits, they turn to parent student loans and private financing to be able to send their children off to college, an increasingly necessary step for people to have a decent shot at landing in the middle class.
More and more students feel they need to go to graduate school to be competitive in the job market. And more time in school means more costs, and a greater need for borrowing. Around 40% of outstanding federal student loan debt is now taken on post-college for master’s and PhD programs.
The average student debt balance among parents was more than $35,000 in 2018-19, up from around $5,000 in the early 1990s.
Meanwhile, the private student loan market has grown more than 70% over the last decade, according to the Student Borrower Protection Center. Americans now owe more in private student loans than they do for past-due medical debt or payday loans.
Every year millions of new students are pumped into the student loan system while current borrowers struggle to exit it.
Many recent college graduates can’t afford the standard 10-year repayment timeline, according to Kantrowitz.
“Generally, people choose the repayment plan with the lowest monthly payment, which is also the plan with the longest term,” he said.
As a result, it takes people 17 years on average to pay off their education debt, data by the U.S. Department of Education shows.
Many borrowers put their loans on hold through forbearances, which cause their debt balances to mushroom with interest, and widespread failures in the government’s forgiveness programs have left those who expected to have their debt written off after a certain period still shouldering it.
The average loan balance at graduation has tripled since the 90s, to $30,000 from $10,000. Around 7% of student loan borrowers are now more than $100,000 in debt.
Without any intervention, over the next two decades, Kantrowitz estimates outstanding student loan debt could hit $3 trillion.
“Given how linear the growth in student debt is, it makes these events easy to predict,” he said.
Meta Platforms Inc. shares soared in after-hours trading Wednesday despite an earnings miss, as the Facebook parent company guided for potentially more revenue than Wall Street expected in the new year and promised more share repurchases amid cost cuts.
Meta META, +2.79% said it hauled in $32.17 billion in fourth-quarter revenue, down from $33.67 billion a year ago but stronger than expectations. Earnings were $4.65 billion, or $1.76 a share, compared with $10.3 billion, or $3.67 a share, last year.
Analysts polled by FactSet expected Meta to post fourth-quarter revenue of $31.55 billion on earnings of $2.26 a share, and the beat on sales coincided with a revenue forecast that also met or exceeded expectations. Facebook Chief Financial Officer Susan Li projected first-quarter sales of $26 billion to $28.5 billion, while analysts on average were projecting first-quarter sales of $27.2 billion.
Shares jumped more than 19% in after-hours trading immediately following the release of the results, after closing with a 2.8% gain at $153.12.
GOOG, +1.56%
Google and Pinterest Inc. PINS, +1.56%
benefited from Meta’s results, with shares for each company rising more than 4% in extended trading Wednesday.
“Our community continues to grow and I’m pleased with the strong engagement across our apps. Facebook just reached the milestone of 2 billion daily actives,” Meta Chief Executive Mark Zuckerberg said in a statement announcing the results. “The progress we’re making on our AI discovery engine and Reels are major drivers of this. Beyond this, our management theme for 2023 is the ‘Year of Efficiency’ and we’re focused on becoming a stronger and more nimble organization.”
Facebook’s 2 billion-user milestone was slightly better than analysts expected for user growth on Meta’s core social network. Daily active users across all of Facebook’s apps neared, but did not crest, another round number, reaching 2.96 billion, up 5% from a year ago.
Meta has been navigating choppy ad waters as it copes with increasing competition from TikTok and fallout from changes in Apple Inc.’s AAPL, +0.79%
ad-tracking system in 2021 that punitively harmed Meta, costing it potentially billions of dollars in advertising sales. Meta has invested heavily in artificial-intelligence tools to rev up its ad-targeting systems and making better recommendations for users of its short-video product Reels, but it laid off thousands of workers after profit and revenue shrunk in recent quarters.
The cost cuts seemed to pay off Wednesday. While Facebook missed on its earnings, it noted that the costs of its layoffs and other restructuring totaled $4.2 billion and reduced the number by roughly $1.24 a share.
Meta executives said they now expect operating expenses to be $89 billion to $95 billion this year based on slower salary growth, cost of revenue, and $1 billion in savings from facilities consolidation — down from previous guidance for $94 billion to $100 billion. Capital expenditures are expected to be $30 billion to $33 billion, down from previous guidance of $34 billion to $37 billion, as Meta cancels multiple data-center projects.
In a conference call with analysts late Wednesday, Zuckerberg called 2023 the “year of efficiency” after 18 years of unbridled growth. He recommitted to Meta’s emphasis on AI and the metaverse, a platform for “better social experiences” than the phone, he said.
“The reduced outlook reflects our updated plans for lower data-center construction spend in 2023 as we shift to a new data-center architecture that is more cost efficient and can support both AI and non-AI workloads,” Li said in her outlook commentary included in the release.
Meta expects to increase its spending on its own stock. The company’s board approved a $40 billion increase in its share-repurchase authorization; Meta spent nearly $28 billion on its own shares in 2022, and still had nearly $11 billion available for buybacks before that increase.
“Investors are cheering Meta’s plans to return more capital to shareholders despite worries over rising costs related to its metaverse spending,” said Jesse Cohen, senior analyst at Investing.com.
“At first glance…Meta getting its mojo back,” Baird Equity Research analyst Colin Sebastian said in a note late Wednesday. “Results and guidance look particularly solid after Snap’s dismal report; however, further cuts to operating and capital expenditures announced this afternoon were perhaps the biggest surprise.”
UBS analyst Lloyd Walmsley said he anticipates double-digit revenue growth exiting 2023 and strong growth in earnings and free cash flow.
The results came a day after Snap Inc. SNAP, -10.29%
posted fourth-quarter revenue of $1.3 billion, flat from a year ago and the worst year-over-year sales growth Snap has ever reported. But they also arrived on the same day Facebook scored a major win in a California court. The company successfully fended off the Federal Trade Commission bid to win a preliminary injunction to block Meta’s planned acquisition of VR startup Within Unlimited.
The federal government on Wednesday hit Amazon.com Inc. with worker-safety related citations and penalties at three more warehouses, two weeks after issuing citations at the company’s warehouses in three different states.
The latest citations are the result of the Occupational Safety and Health Administration’s investigation of Amazon AMZN, +1.96%
warehouses stemming from referrals from the U.S. Attorney’s Office for the Southern District of New York. At all six locations, OSHA investigators cited the company for exposing warehouse workers to a high risk of low back injuries and other musculoskeletal disorders and asked for a multitude of changes and corrections.
“Amazon’s operating methods are creating hazardous work conditions and processes, leading to serious worker injuries,” said OSHA Assistant Secretary Doug Parker in a statement Wednesday. “They need to take these injuries seriously and implement a company-wide strategy to protect their employees from these well-known and preventable hazards.”
The newest citations come from investigations into Amazon warehouses in Aurora, Colo.; Nampa, Idaho; and Castleton, N.Y. At all three sites, OSHA inspectors concluded that workers are suffering from musculoskeletal injuries “as a result of lifting heavy items while attempting to meet pace of work and production quotas,” according to each of the hazard letters that were sent to those warehouses’ operations managers. Those concerns were similar to those raised by OSHA at the three other Amazon warehouses in Florida, Illinois and a different warehouse in New York a couple of weeks ago.
In Aurora and Nampa, inspectors also found evidence that injuries may not have been reported because Amazon’s on-site first-aid clinic “was not staffed appropriately.” In Castleton, staffers at the company’s on-site clinic, known as AmCare, “question whether workers are actually injured, pressure injured workers to work through their injuries, and steer injured workers to Amazon-preferred doctors,” Rita Young, OSHA area director, wrote in the hazard letter.
The penalties associated with the citations at the three sites total $46,875. OSHA also asked Amazon to detail the changes it makes in response, and said the company’s response will determine whether more evaluation is needed. In addition, the agency’s inspectors may do follow-up visits within the next six months.
Just like with the first three citations, Amazon intends to appeal.
“We take the safety and health of our employees very seriously, and we don’t believe the government’s allegations reflect the reality of safety at our sites,” Amazon spokeswoman Kelly Nantel said in an emailed statement.
A company spokeswoman also referred to several safety-related efforts by the company, including its partnership with the National Safety Council; equipment that’s supposed to help reduce the need for twisting, bending and reaching; and “process improvements” designed by Amazon’s robotics team.
In anticipation of Wednesday’s OSHA citations, a group of worker advocates held a virtual news conference Tuesday. Among the panelists was Debbie Berkowitz, a former chief of staff at OSHA and now a fellow at the Kalmanovitz Initiative for Labor and the Working Poor at Georgetown University.
“I want to make it clear to everybody that these OSHA citations are incredibly historic and significant,” Berkowitz said. “Don’t get thrown by the low amount of penalties,” she added, saying the Occupational Safety and Health Act is a “weak law.”
She went on to say that “OSHA really grounded their investigations using doctors, experts, and what to do to mitigate the hazards… They show that Amazon needs to take action.”
Also present on the news conference was Amazon warehouse worker Jennifer Crane, from St. Peters, Mo.
“I’m glad to see OSHA investigate the safety crisis at Amazon,” she said. “The company blames us for getting injured. They push us to work at unrealistic speeds.”
Intel Corp. continues to cut costs for everything except payments to investors.
Intel INTC, +3.03%,
which is already in the process of cutting what is believed to be thousands of jobs amid steep declines in profit and revenue, is reducing Chief Executive Pat Gelsinger’s base salary by 25% and trimming other salaries at a descending rate based on seniority, down to 5% cuts for midlevel positions, a person familiar with the matter told MarketWatch. While nonexempt workers and junior positions face no pay cuts, Intel is trimming its 401(k) contributions to 2.5% from 5% and will suspend merit raises and quarterly performance bonuses, the person said. Annual performance bonuses and stock grants will remain.
In an emailed statement, an Intel spokesperson confirmed “several adjustments to our 2023 employee compensation and rewards programs.”
“As we continue to navigate macroeconomic headwinds and work to reduce costs across the company, we’ve made several adjustments to our 2023 employee compensation and rewards programs,” the statement said. “These changes are designed to impact our executive population more significantly and will help support the investments and overall workforce needed to accelerate our transformation and achieve our long-term strategy. We are grateful to our employees for their commitment to Intel and patience during this time as we know these changes are not easy.”
Intel has not touched its dividend, though, even as its free cash flow fell into the red during 2022 and is expected to be negative again this year. The chip maker paid out roughly $1.5 billion in dividends in the fourth quarter, completing $6 billion in annual payments, and maintained the same level of payments for the first quarter despite analysts questioning whether the company can afford it.
“The board [and] management, we take a very disciplined approach to the capital allocation strategy and we’re going to remain committed to being very prudent around how we allocate capital for the owners, and we are committed to maintaining a competitive dividend,” Chief Financial Officer David Zinsner said when asked directly about the dividend during Intel’s earnings call last week.
Intel shares have declined 42.1% in the past 12 months, as the S&P 500 SPX, +1.30%
has dropped 10.3% and the Dow Jones Industrial Average DJIA, +0.36%
— which counts Intel as one of its 30 components — has fallen 3.7%.
The numbers: The employment cost index slowed at the end of 2022 for the third quarter in a row, but worker compensation still rose a sharp 1% and didn’t offer much comfort to the Federal Reserve as it fights to tame inflation.
Economists polled by The Wall Street Journal had forecast a 1.1% increase in the ECI in the fourth quarter.
Although trending in the right direction, labor costs are still rising far faster than the Fed would like.
Compensation climbed at a 5.1% clip in the 12 months ended in December — up from 5% in the prior quarter — to leave the increase in worker pay near the highest level in 40 years.
By contrast, wages and benefits rose an average of 2.7% a year from 2017 to 2019.
Key details: Wages advanced 1% in the fourth quarter, but in a good sign, they slowed from 1.3% in the prior period.
The increase in wages in the 12 months ended in December was flat at 5.1%, however.
Benefits rose at a 0.8% pace in the last three months of 2022. The 12-month increase in benefits was unchanged at 4.9%.
The ECI reflects how much companies, governments and nonprofit institutions pay employees in wages and benefits. Wages make up about 70% of employment costs and benefits the rest.
The big picture: Senior Fed officials want to see a tight labor market loosen up and wage growth decelerate further to help ensure inflation returns to pre-pandemic levels of 2% or so.
The central bank on Wednesday is expected to raise a key interest again. It’s likely to keep raising rates — or keep them high for longer — until it sees more signs in the ECI or other wage trackers that labor costs are coming down.
The increase in consumer prices slowed to 6.5% at the end of 2022 from a 40-year high of 9.1% last summer, but it’s still more than triple the Fed’s inflation goal.
Looking ahead: “This result is a decent outcome for the Fed, as labor costs appear to be decelerating, but it would be premature to declare victory,” said chief economist Stephen Stanley of Amherst Pierpont Securities. “With the unemployment rate at a 50-year-plus low of 3.5%, it would be exceedingly optimistic to conclude that wage pressures have rolled over.”
“Wage growth is slowing gradually,” said senior U.S. economist Andrew Hunter of Capital Economics said in a note to clients. “The Fed is still likely to keep raising interest rates at the next couple of meetings, but we expect a further slowdown in wage growth over the coming months to convince officials to pause the tightening cycle after the March meeting.”
Market reaction: The Dow Jones Industrial Average DJIA, -0.77%
and S&P 500 SPX, -1.30%
were set to open higher in Tuesday trades. Stocks fell on Monday.
Royal Philips NV on Monday said it will cut an extra 6,000 jobs by 2025, including around 3,000 this year, as part of a plan to improve performance and drive value creation.
PHG, +0.59%
–which said in October that it was cutting 4,000 jobs, or about 5% of its 80,000-strong workforce–said Monday that the simplified operating model will make it more agile and competitive, while reducing costs. The job cuts announced Monday are in addition to those outlined in October.
Philips said that it will now focus on extracting the full value of its portfolio through a strategy of focused organic growth.
The company made the disclosure as it reported a swing to net loss for the fourth quarter of last year amid higher costs, but said that it has seen some improvement in the period and that is taking actions to address operational challenges in an uncertain environment.
The Dutch health-technology company–which sells products including MRI scanners and ultrasound machines–posted a net loss attributable to shareholders of 106 million euros ($170.6 million) compared with a profit of EUR157 million for the fourth quarter of 2021 and a company-compiled consensus loss of EUR16 million.
Adjusted earnings before interest, taxes and amortization–which strips out exceptional and other one-off items–was EUR651 million compared with EUR647 million and a consensus of EUR428 million.
The company said its performance was hit by cost inflation that was partly offset by pricing and productivity measures.
Group sales in the period were EUR5.42 billion compared with EUR4.94 billion and a consensus of EUR5.03 billion.
Like-for-like sales were up 3%, compared with a company-compiled forecast for a fall of 5.2%, due to improved component supplies
Royal Philips said it now expects low-single-digit comparable sales growth and high-single-digit adjusted Ebita margin for this year.
It has also targeted mid-single-digit comparable sales growth and a low-teens adjusted Ebita margin by 2025, and for mid-single-digit comparable sales growth and mid-to-high-teens adjusted Ebita margin beyond 2025.
“Considering the slowing of consumer demand and a gradual improvement of the order book conversion during 2023, Philips anticipates a slow start to the year, with improvements throughout the year supported by the ongoing productivity, pricing and other actions,” it said.
Write to Ian Walker at ian.walker@wsj.com
The company said its performance was hit by cost inflation that was partly offset by pricing and productivity measures.
Group sales in the period were EUR5.42 billion compared with EUR4.94 billion and a consensus of EUR5.03 billion.
Like-for-like sales were up 3%, compared with a company-compiled forecast for a fall of 5.2%, due to improved component supplies
Royal Philips said it now expects low-single-digit comparable sales growth and high-single-digit adjusted Ebita margin for this year.
“Considering the slowing of consumer demand and a gradual improvement of the order book conversion during 2023, Philips anticipates a slow start to the year, with improvements throughout the year supported by the ongoing productivity, pricing and other actions,” it said.
